DEFINITION OF ETHICS

• Oxford Dictionary: is relating to morals

• It is the study of morals & moral choices
• It focuses on standards, rules & codes of
conduct that govern the behavior of individuals &
groups
• Is a science of morals

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 ETHICS

• Derived from words Latin ‘ethicus’, Greek ‘

ethikos’ .
• Ethos stands for character or manners
• It is a science of morals
• Moral principles are rules of conduct

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 Definition of business ethics

• Are moral principles that define right or wrong behavior

in the world of business
• Is an evaluation of business activities & behavior as right
or wrong
• Ethical conduct conforms what a group or society as a
whole considers right behavior
• Is application of general ethical rules to business
behavior

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 Nature of Ethics
• Concepts of ethics deals with human beings only.
Human beings can distinguish right or wrong, good or
evil, just and proper.
• The Study of ethics is a set of systematic knowledge
about moral behaviour and conduct. Study of ethics is a
science – a social science.
• Science of ethics (Normative Science) : it judges the
value of the facts in terms of ideal situation.
• Deals with human conduct which is voluntary, not forced
or coerced by persons or circumstances.

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 NATURE OF ETHICS
• Concerns only human beings
• Study of systematic knowledge about
moral behavior of conduct
• It is a normative science( measuring facts
in terms of ideal)
• Concerns with human conduct which is
voluntary and not forced by persons or
circumstances
• Are dealing with human judgment
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 Ethics
Meaning
Character or manner Science of morals
Moral principles Recognized rules of conduct

Principles
Fairness Integrity
Commit to agreements Broad-mindedness
Considerateness Responsible citizenship
Attempt to excel Accountability
Importance to human esteem and self respect

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 Objectives of Ethics
• Study of human behaviour and makes evaluative
assessment about that as moral or immoral (A diagnostic
goal).
• Establishes moral standards and norms of behaviour.
• Makes judgment upon human behavior based on these
standards and norms.
• Prescribes moral behaviour and makes
recommendations about how to or how not to behave
(Therapeutic goal).
• Expresses an opinion or attitude about human contact in
general.

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 Sources of Ethics
1. Genetic Inheritance : the qualities of goodness is a product of
genetic traits strengthened over time by the evolutionary
process.
2. Religion : religious morality is clearly a primary focus in
shaping our societal ethics.
3. Philosophical Systems : the quality of pleasure to be derived
from an act was the essential measure of its goodness.
4. Cultural Experience : individual values are shaped in large
measure by the norms of the society.
5. The legal system : laws represent a rough approximation of
society’s ethical standards.
6. Codes of Conduct : three primary categories of codes, a)
company codes, b) company operating policies, c) codes of
ethics.

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 RELATIONSHIP BETWEEN BUSINESS &
ETHICS
• The Unitarian view -
Business is only a subset or substructure of the society-
View of the church
• The separatist view - ( Adam Smith & Milton Friedman)
Only goal of the business should be profit maximisation
• The integration view -
• Integration of business with ethics -Talbot

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 Business Ethics
• The Separatist view : the only objective of business is
to profit maximization and business has no right to
meddle with ethics.
• The Unitarian view : tells that business is a subject of
the moral structure of the society. Business is a subset
or substructure of the moral structure of the society.
Business and morality cannot be separated.
• Integration view : neither was business an extension of
morality and ethics nor can business keep himself
absolutely aloof from the ethical practices of society
wherein it exists and operates.

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 Characteristics of Business Ethics
• Ethical decisions differ with individual perspective of
different persons. Each person views the ethical
question in terms of his or her own frame of reference.
And this frame of reference is the person’s own unique
value system.
• Ethical decisions are not limited only to themselves, but
affects a wide range of other situations as well. Similarly,
unethical decisions do not end in themselves, but have
widespread ramifications.
• Most ethical decisions involve a tradeoff between cost
incurred and benefits received. Cost and benefits,
profits and social responsibilities are two ends of a single
spectrum. Both cannot be maximized simultaneously.

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 Characteristics of Business Ethics
• The consequences of most ethical or unethical decisions
are not clear. The only certainty is that somewhere,
sometime, somehow, something positive will result from
an ethical decision and something negative from
unethical one.
• Every person is individually responsible for the ethical or
unethical decision and action that he or she takes. Taking
an ethical decision cannot be an impersonal activity as it
involves the person’s individual unique value system
along with his moral standards.
• Ethical decisions are voluntary human actions. A person
cannot escape his personal liability for his crimes citing
force of circumstances or pressure.

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 Nature of business in ethics
• Overt problem • Covert
Can clearly see More complex in nature
e.g. Bribery Not transparent
Difficult to locate, eliminate
Theft
Dangerous to country &
Sabotage people
collusion Threatening to business
Eg; merger/
acquisitions/promotion &
demotion

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 Characteristics of ethical decision

• Right – ( differ from person to person)

• Equitable
• Good
• Proper
• fair
• Just
• Is unstructured
• No framework
• It is abstract

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 Why need for business ethics
• Business operates within a society
• Must contribute to the welfare of the society
• To get social sanction of the society to earn loyal
customers
• It should have great impact on community
• To keep a good image of the company
• Ethical actions & decisions may not yield immediate
results but is good in long run.
• It is only ethical organization which will grow & survive
• Business needs to function as an corporate citizens of the
country.
• To come out of narrow mentality & narrow goals

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 Importance of the business ethics

• Personal gain
• Individual values vis-à-vis organizational
goals
• Manager values & attitudes
• Competitive pressures
• Cross cultural contradictions

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Arguments against business ethics
• As per few leaders & Mr. Milton Friedman(1960)
in his book “ capitalism & freedom’ business
being economic entities should have nothing to
do with morals
• As per Theodore Levit psychologist “ expressed
fear that if business being concerned about
ethics then business values would come to
dominate social values.

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 Code of Ethics – American Marketing Association
• Responsibilities of Marketer :
a) not to do harm knowingly,
b) to adhere all applicable laws and regulations,
c) the accurate representation of their education, training and
experience,
d) active support, practice and promotion of this code of ethics.
• Honesty and Fairness :
a) being honest in serving consumers, clients, employees, suppliers,
distributors and the public.
b) no knowingly participating in conflict of interest without prior notice to
all parties involved,
c) establishing equitable fee schedules including the payment or receipt
of usual, customary and/or legal compensation for marketing exchange.

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Code of Ethics – American Marketing Association
• Rights and Duties of parties :
a) products and service offered are safe and fit for
their intended use,
b) communications about offered product and
services are not deceptive,
c) all parties intend to discharge their obligations,
financial and otherwise, in good faith,
d) approximate internal methods exist for equitable
adjustment and/ or, redress of grievances concerning
purchases.

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Code of Ethics – American Marketing Association

• The code of ethics is not limited to the following

responsibilities of the marketer :
1) in the area of product development management,
2) disclosure of all substantial risks associated with
product or service usage,
3) identification of any product component substitution
that might materially change the product or impact on the
buyers’ purchase decision,
4) identification of extra cost added features.

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Ethical value system( overview)
• Situations ‘are or ‘ought be’
• See life as it is
• With out perceptions & judgments
• Inside out – Stephen coveys principle
• Values to be treated as qualities to be approved
• Value increases quality of life and maketh the society
• One must have a standard moral behavior
• Values are different for moral standards or norms of
behavior and code of conduct

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 System of universalism
EmManuel kant 1734- 1804

Def: is based on the duties & obligation of the individual in

society is deontology
• moral worth is the good intention of the person
• Personal duties & obligations are universal
• One should act only in the ways that could wish all others to
act
• Treat people with dignity & respect
• Finds difficulty in application

Examples:

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 SYSTEM OF UTILITARIANISM
TELEOLOGY- Jeremy Bentham
Def: is not concerned with the act itself but
with the consequences of the act
• It is not based on the intent of the people
• It is a end based ethics- Consequentianilsm
• Version of teleology is utilitarianism
• Creating a greater degree of benefits to large number of
people with least harm
• EXAMPLES: BUILDING ROADS/ KILLING OF
TERRORIST

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 System of distributive justice &
social contacts – John rawls
Def: justice is thought to be the most likely
outcome of an ethical process of decision
making
• Synergy formed by group of people
• Conflicts result if there is no transparency
Example; co-operative society

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Legal system & professional codes

Def: the moral worth of an action is

determined by the legal systems
• If action of an individual is within the
purview of law then it is considered right
• Example: Doctor following the Hippocratic
code

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 Ethical Models
• The golden rule model
Derived from new testament

• Kantian Model
Did not believe in predetermined actions
Based on every person has certain rights

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